ENVIRONMENT

Final Chapters Being Written in BP’s Gulf Disaster

Oily water in May 2010 at the site of the Deepwater Horizon oil spill.(Gerald Herbert-Pool/AP)

In a major move toward putting an environmental catastrophe behind it, BP has agreed to a $7.8 billion settlement with thousands of individuals and businesses seeking damages from the 2010 oil spill in the Gulf of Mexico.

The proposed settlement, which must be approved by U.S. District Judge Carl Barbier in New Orleans, does not end civil litigation filed by the U.S. government and states over the spill, one of the worst environmental disasters in U.S. history.

Federal penalties alone from the spill could amount to more than $20 billion under the Clean Water Act, and government prosecutors are still considering criminal charges against BP and its partners over the April 20, 2010, explosion on the Deepwater Horizon drilling rig that killed 11 workers and led to the release of more than 200 million gallons of oil in the Gulf.

BP said the settlement with fishermen, tourism businesses and others will come from the $20 billion compensation fund established by the company in 2010 under pressure from President Obama. More than $8 billion has already been paid from the fund to more than 100,000 individuals and businesses that agreed not to sue for damages, and other claims are still being processed.

In a statement, BP assured its investors that the settlement is not expected to result in any increase in the $37.2 billion the company has set aside for cleanup costs and damages. However, that assumes federal and state prosecutors will not agree to settle civil claims with BP and proceed to trial in Barbier’s court.

ADVERTISEMENT

The trial had been scheduled to start Feb. 27 but was postponed a week to allow settlement negotiations to continue.

Congress has been considering legislation pushed by lawmakers from the Gulf states that would require 80 percent of any penalties paid to the government by BP to go back into Gulf restoration projects. But if the bill is not passed before a settlement is reached, BP’s fines and penalties would go directly into the federal treasury with no guarantee of being returned to the region.

A task force of federal prosecutors, working with a grand jury, has been working on a possible criminal case against BP and its partners since BP’s Macondo well deep in the Gulf of Mexico was capped in July 2010. A separate team of scientists and economists has been conducting a Natural Resource Damage Assessment to estimate the value of fish, wildlife and other ecological resources lost in the spill.

BP has already agreed to put at least $1 billion into restoration projects, but those costs are expected to go much higher as researchers monitor the long-term damages to the Gulf.

Cleanup work continues on a daily basis in the region, where oil mats and tar balls are still turning up on Gulf shores, with the ultimate restoration plan still to be determined by a federal and state task force led by Environmental Protection Agency Administrator Lisa Jackson, a New Orleans native.

"From the beginning, BP stepped up to meet our obligations to the communities in the Gulf Coast region, and we've worked hard to deliver on that commitment for nearly two years,” said BP CEO Bob Dudley in the company’s statement on the settlement. "The proposed settlement represents significant progress toward resolving issues from the Deepwater Horizon accident and contributing further to economic and environmental restoration efforts along the Gulf Coast."